Collective rules and the use of protected geographical indications by firms

Abstract Geographical Indications (GIs) are tools adopted by firms to underline that reputation, qualities and characteristics of a product are strictly linked to its geographical origin. The protection granted to GIs by the law may exert strong effects on firms’ profitability. The extent by which firms use the protected GI for marketing their products depends on many factors, among which the expected benefits and costs, the marketing strategy pursued by firms, and the characteristics of the Product specification (PS). Notwithstanding the great emphasis often put on the positive effects of the GI protection, the use firms make of the protected GI is in many cases far away from its potentiality. So far, academic literature has not handled this topic in a systematic perspective. The aim the paper is to analyze, by means of two case-studies related to protected GIs in Tuscany (Italy), the “Fagiolo di Sorana IGP” (Sorana Bean PGI) and the “Pecorino Toscano DOP” (Tuscan Sheep-milk cheese PDO), the strategic decisions that lead firms to decide whether and to what extent to use the protected GI for marketing of their products. Results show that firms use the protected GI to attain a wide spectrum of results that are often far away from the expected ones. Besides, the way PS has been drawn greatly affects the effects generated by the GI protection. Much of the real use of protected GIs by firms relies on the coherence between firms’ characteristics and strategies, and PS, while the different use of the protected GI by firms seems not to depend by entry-barriers linked to costs needed to comply with the PS.